EXPLANATION: CAPITALS INDICATE MAT TER ADDED TO EXISTIN G LAW.
[Brackets] indicate matter deleted from existing law.
Underlining indicates amendments to bill.
Strike out indicates matter stricken from the bill by amendment or deleted from the law by
amendment.
*hb1028*
HOUSE BILL 1028
P6 5lr2376
CF SB 810
By: Delegate Forbes (Chair, Joint Committee on Pensions)
Introduced and read first time: February 3, 2025
Assigned to: Appropriations
Committee Report: Favorable
House action: Adopted
Read second time: March 4, 2025
CHAPTER ______
AN ACT concerning 1
Board of Trustees for the State Retirement and Pension System – Investment 2
Division – Compensation and Staffing Committee 3
FOR the purpose of repealing the Objective Criteria Committee of the Board of Trustees 4
for the State Retirement and Pension System and establishing a Compensation and 5
Staffing Committee of the Board of Trustees; providing for the membership of the 6
Committee; clarifying the Board of Trustees’ authority to determine the 7
qualifications and compensation of and the type and number of positions necessary 8
for carrying out the professional investment functions of the Investment Division of 9
the State Retirement Agency; requiring the Committee to make certain 10
recommendations to the Board of Trustees regarding the objective criteria to be used 11
in setting compensation and awarding financial incentives to certain employees in 12
the Investment Division; requiring the Board of Trustees to consider certain 13
recommendations of the Committee; clarifying the requirements for the Board of 14
Trustees to enter into an agreement with a consultant to provide certain services to 15
the Committee; and generally relating to the operations of the Board of Trustees for 16
the State Retirement and Pension System. 17
BY repealing and reenacting, with amendments, 18
Article – State Personnel and Pensions 19
Section 21–108(b), 21–118.1(a), (b), and (d)(1)(i), and 21–122(f) and (g) 20
Annotated Code of Maryland 21
(2024 Replacement Volume and 2024 Supplement) 22
BY repealing and reenacting, without amendments, 23 2 HOUSE BILL 1028
Article – State Personnel and Pensions 1
Section 21–122(a)(1) through (3) 2
Annotated Code of Maryland 3
(2024 Replacement Volume and 2024 Supplement) 4
SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMBLY OF MARYLAND, 5
That the Laws of Maryland read as follows: 6
Article – State Personnel and Pensions 7
21–108. 8
(b) In addition to the Investment Committee established under § 21–114 of this 9
subtitle AND THE COMPENSATION AND STAFFING COMMITTEE ESTABLISHED UNDER 10
§ 21–122 OF THIS SUBTITLE , the Board of Trustees may establish other committees. 11
21–118.1. 12
(a) Notwithstanding any other provision of law, on the recommendation of the 13
Executive Director and the [Investment] COMPENSATION AND STAFFING Committee, 14
the Board of Trustees shall determine the qualifications and appointment, as well as 15
compensation and leave, for the Chief Investment Officer who shall be the head of the 16
Investment Division. 17
(b) (1) In making determinations and appointments under this section, the 18
Executive Director and the [Investment] COMPENSATION AND STAFFING Committee 19
shall consider the comparative qualifications, compensation, and leave of employees 20
serving in similar positions and discharging similar duties at comparable public pension 21
funds. 22
(2) (i) 1. The Board of Trustees shall adopt objective criteria for 23
setting the qualifications and compensation of the Chief Investment Officer. 24
2. The Board shall consider the recommendations of the 25
[Objective Criteria] COMPENSATION AND STAFFING Committee under § 21–122(g) of 26
this subtitle before adopting objective criteria for setting compensation. 27
(ii) The criteria adopted under subparagraph (i) of this paragraph 28
shall include objective benchmarks of investment performance that shall be met or 29
exceeded for the Chief Investment Officer to be eligible for an increase in compensation. 30
(iii) The Board may not grant any increases in compensation to the 31
Chief Investment Officer in a fiscal year in which State employees are subject to a furlough. 32
(iv) The Chief Investment Officer’s compensation may not be 33
adjusted in accordance with cost–of–living adjustments and merit increases available to 34
State employees. 35 HOUSE BILL 1028 3
(d) (1) (i) 1. On the recommendation of the [Investment] 1
COMPENSATION AND STAFFING Committee, the Board of Trustees shall establish 2
objective criteria for awarding financial incentives to the Chief Investment Officer. 3
2. The Board shall consider the recommendations of the 4
[Objective Criteria] COMPENSATION AND STAFFING Committee under § 21–122(g) of 5
this subtitle before adopting objective criteria for awarding financial incentives. 6
21–122. 7
(a) (1) There is an Investment Division in the State Retirement Agency. 8
(2) Subject to subsection (f) of this section, the Board of Trustees shall 9
determine the qualifications and compensation for positions within the Investment 10
Division. 11
(3) The Board of Trustees: 12
(i) may determine and create the type and number of positions 13
necessary for carrying out the professional investment functions of the Investment 14
Division; and 15
(ii) shall adopt objective criteria to be followed when exercising its 16
authority under item (i) of this paragraph and paragraph (2) of this subsection. 17
(f) (1) (i) 1. The Board of Trustees shall adopt objective criteria for 18
setting the qualifications and compensation of positions under subsection (a) of this section. 19
2. The Board shall consider the recommendations of the 20
[Objective Criteria] COMPENSATION AND STAFFING Committee under subsection (g) of 21
this section before adopting objective criteria for setting compensation. 22
(ii) The criteria adopted under subparagraph (i) of this paragraph 23
shall include: 24
1. consideration of the comparative qualifications and 25
compensation of employees serving in similar positions and discharging similar duties at 26
comparable public pension funds; 27
2. limitations on the amount by which the compensation for 28
a position may be increased each fiscal year, not to exceed 10%; and 29
3. objective benchmarks of investment performance that 30
shall be met or exceeded by an individual to be eligible for an increase in compensation. 31
4 HOUSE BILL 1028
(iii) The Board of Trustees may not grant any increases in 1
compensation in a fiscal year in which State employees are subject to a furlough. 2
(iv) For positions that do not involve discretion over 3
investment–related decisions, the Board of Trustees may not set compensation that exceeds 4
compensation for providing comparable services in other State employment. 5
(v) Except for positions under subparagraph (iv) of this paragraph, 6
the compensation of an employee may not be adjusted in accordance with cost–of–living 7
adjustments and merit increases available to State employees. 8
(VI) BASED ON THE RECOMMEN DATIONS OF THE 9
COMPENSATION AND STAFFING COMMITTEE UNDER SUBSE CTION (G) OF THIS 10
SECTION, THE BOARD OF TRUSTEES SHALL APPROV E: 11
1. THE TYPE AND NUMBER OF POSITIONS IN THE 12
INVESTMENT DIVISION; 13
2. THE QUALIFICATIONS F OR EACH POSI TION IN THE 14
INVESTMENT DIVISION, AS APPROVED UNDER IT EM 1 OF THIS SUBPARAGRAPH ; AND 15
3. ANY COMPENSATION AND FINANCIAL INCENTIVES 16
FOR THE CHIEF INVESTMENT OFFICER AND INVESTMENT DIVISION STAFF, 17
INCLUDING SALARY INC REASES OR DECREASES RECOMMENDED FOR TH E CHIEF 18
INVESTMENT OFFICER AND EMPLOYEES OF THE INVESTMENT DIVISION. 19
(2) (i) 1. The Board of Trustees shall adopt objective criteria for 20
awarding financial incentives under subsection (a) of this section. 21
2. The Board shall consider the recommendations of the 22
[Objective Criteria] COMPENSATION AND STAFFING Committee under subsection (g) of 23
this section before adopting objective criteria for awarding financial incentives. 24
(ii) Financial incentives may only be awarded based on the objective 25
criteria adopted in accordance with subparagraph (i) of this paragraph. 26
(iii) The criteria adopted under subparagraph (i) of this paragraph 27
shall include: 28
1. limitations on the amount of financial incentives for a 29
position in a fiscal year, not to exceed 33% of a position’s compensation, exclusive of 30
financial incentives; and 31
2. objective benchmarks of investment performance that 32
shall be met or exceeded by an individual to be eligible for financial incentives, including 33 HOUSE BILL 1028 5
benchmarks for the asset class in which investments are under the direction of the 1
individual. 2
(iv) 1. Any financial incentives paid shall be paid over multiple 3
fiscal years in equal installments. 4
2. The dates on which financial incentives awarded under 5
this section shall be paid shall be set by the Board of Trustees at the time the financial 6
incentives are determined. 7
3. The dates set under subsubparagraph 2 of this 8
subparagraph may not be changed after being set. 9
(v) Except as provided in subparagraph (vi) of this paragraph, if an 10
individual who has earned financial incentives separates from employment in the 11
Investment Division, the Board of Trustees may not pay out any remaining financial 12
incentives due to be paid after the date of separation from employment. 13
(vi) The Board of Trustees may pay any remaining earned financial 14
incentives after the date of separation from employment if the individual retires directly 15
from the Investment Division on or 30 days after the date of separation. 16
(vii) The Board of Trustees may not award financial incentives for 17
positions that do not involve discretion over investment–related decisions. 18
(viii) 1. The Board of Trustees may not pay out financial 19
incentives in a fiscal year in which State employees are subject to a furlough. 20
2. The Board of Trustees shall pay out any financial 21
incentives not paid to an individual in accordance with subsubparagraph 1 of this 22
subparagraph only: 23
A. after the furlough period has ended; and 24
B. if the individual is currently employed in the Investment 25
Division. 26
(3) (i) On or before October 1 each year, the Board of Trustees shall 27
submit to the Senate Budget and Taxation Committee, the House Appropriations 28
Committee, and the Joint Committee on Pensions, in accordance with § 2–1257 of the State 29
Government Article, a copy of the most recent criteria adopted under this subsection, 30
INCLUDING ANY CHANGE S TO COMPENSATION AN D INCENTIVES FOR THE CHIEF 31
INVESTMENT OFFICER AND INVESTMENT DIVISION STAFF. 32
(ii) In addition to the report required under subparagraph (i) of this 33
paragraph, the Board of Trustees shall submit, within 30 days of adoption by the Board of 34
Trustees, a copy of any changes adopted to the criteria established under this subsection to 35 6 HOUSE BILL 1028
the Senate Budget and Taxation Committee, the House Appropriations Committee, and the 1
Joint Committee on Pensions, in accordance with § 2–1257 of the State Government Article. 2
(4) On or before October 1, January 1, March 1, and July 1 each year, the 3
Board of Trustees shall submit to the Senate Budget and Taxation Committee, the House 4
Appropriations Committee, and the Joint Committee on Pensions, in accordance with § 5
2–1257 of the State Government Article, a report on system investment returns for the 6
preceding fiscal quarter, including: 7
(i) investment performance by asset class, including performance 8
relative to asset class benchmarks; and 9
(ii) investment performance of assets under the direction of each 10
Investment Division employee. 11
(g) (1) There is [an Objective Criteria] A COMPENSATION AND STAFFING 12
Committee of the Board of Trustees. 13
(2) (I) The [Committee consists of the] following members SHALL BE 14
INCLUDED ON THE COMMITTEE: 15
[(i) one member of the Senate of Maryland serving on the Joint 16
Committee on Pensions, appointed by the President of the Senate; 17
(ii) one member of the House of Delegates serving on the Joint 18
Committee on Pensions, appointed by the Speaker of the House; 19
(iii) the State Treasurer or the State Treasurer’s designee; 20
(iv)] 1. the Secretary of Budget and Management or the 21
Secretary’s designee; 22
[(v)] 2. one [member] OR MORE MEMBERS of the Board of 23
Trustees under § 21–104(a)(4)(i), (ii), (iii), (iv), or (v) of this subtitle, appointed by the 24
Chairman of the Board of Trustees; AND 25
[(vi)] 3. one [member] OR MORE MEMBERS of the Board of 26
Trustees under § 21–104(a)(4)(viii) of this subtitle, appointed by the Chairman of the Board 27
of Trustees[; and 28
(vii) a member of the public with financial industry experience, 29
appointed jointly by the presiding officers of the General Assembly]. 30
(II) THE FOLLOWING MEMBERS MAY BE APPOINTED TO THE 31
COMMITTEE BY THE CHAIRMAN OF THE BOARD OF TRUSTEES: 32
HOUSE BILL 1028 7
1. THE STATE TREASURER, OR THE STATE 1
TREASURER’S DESIGNEE; AND 2
2. THE COMPTROLLER , OR THE COMPTROLLER ’S 3
DESIGNEE. 4
(3) (i) The Chairman of the Board of Trustees shall appoint the Chair 5
of the Committee. 6
(ii) The Chairman of the Board of Trustees may not serve as the 7
Chair of the Committee. 8
(4) [On or before December 31, 2018, and at least once every 5 years 9
thereafter, the] THE Committee shall make recommendations to the Board of Trustees 10
regarding: 11
(i) objective criteria under § 21–118.1(b)(2) and (d) of this subtitle 12
for the compensation and financial incentives for the Chief Investment Officer; and 13
(ii) objective criteria under subsections (a) and (f) of this section for 14
the compensation and financial incentives for the positions in the Investment Division. 15
(5) (i) The Board of Trustees shall enter into an agreement with a 16
consultant to assist the Committee AND THE BOARD regarding objective criteria under 17
this subsection AND THE BOARD’S RESPONSIBILITIES F OR COMPENSATION AND 18
STAFFING. 19
(ii) The Board of Trustees may not enter into an agreement with a 20
consultant under subparagraph (i) of this paragraph if that consultant is actively providing 21
consulting services for the Board of Trustees [and] OR the staff of the Investment Division. 22
(III) THE CHIEF INVESTMENT OFFICER MAY NOT SEPAR ATELY 23
RETAIN THE CONSULTAN T HIRED UND ER SUBPARAGRAPH (I) OF THIS PARAGRAPH 24
FOR ANY SERVICES . 25
(6) (i) The [Chief Investment Officer] EXECUTIVE DIRECTOR shall 26
serve in an advisory capacity to the Committee REGARDING COMPENSATI ON AND 27
INCENTIVE COMPENSATI ON FOR THE CHIEF INVESTMENT OFFICER AND 28
INVESTMENT DIVISION STAFF. 29
(ii) The Chief Investment Officer may not participate in any 30
deliberations regarding the criteria for compensation and financial incentives for the Chief 31
Investment Officer OR INVESTMENT DIVISION STAFF. 32
8 HOUSE BILL 1028
(III) THE CHIEF INVESTMENT OFFICER SHALL SERVE I N AN 1
ADVISORY CAPACITY RE GARDING THE TYPE OF , NUMBER OF, AND QUALIFICATIONS 2
FOR POSITIONS IN THE INVESTMENT DIVISION. 3
SECTION 2. AND BE IT FURTHER ENACTED, That this Act shall take effect July 4
1, 2025. 5
Approved:
________________________________________________________________________________
Governor.
________________________________________________________________________________
Speaker of the House of Delegates.
________________________________________________________________________________
President of the Senate.